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Mortgage affordability reaches 20 per cent
Sep 04, 2009 - Boris Chan
A new survey has found that one in five property owners have stated that they will face severe mortgage stress if their monthly home loan repayments were to be increased.
The Reserve Bank of Australia has warned that it may soon have to lift the cash rate from its present 3 per cent.
Economists have stated that the cash rate could rise to 5 per cent over the next 18 months, which would increase monthly repayments by $450 a month on an average $340,000 mortgage.
Up to 20% homeowners couldn't afford rate rise
Loan Market Group recently undertook an online survey and found that 19 per cent of respondents said that any increase in interest rates would stretch them to the limit.
The survey of 600 respondents found that 38 per cent said that they could afford to pay only $250 per month more, while 27 per cent said they would be able to pay up to $500. Only 16 per cent said that they could afford to increase their monthly repayments by more than $500.
There are a number of consumers who have openly stated that they can't afford rates to go up another two percentage points.
Homeowners not only need to worry about the RBA but also about the major banks lifting variable rates independently.
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